High expectations are often hard to realize. The pace of deal-making by A/E firm buyers and sellers in the first six months of 2024, however, has the industry on track to meet Morrissey Goodale’s forecast of a near-record 450 mergers and acquisitions for the year, which would trail only 2022’s record volume of 485 transactions.
Despite the Federal Reserve Board keeping interest rates higher for longer than expected in the first half of 2024, Morrissey Goodale tracked 243 deals involving U.S. design and environmental firms, matching the total for the first six months of 2023 and second only to 2022’s high-water mark of 268 first-half deals. M&A activity continues to be propelled by a surge in federal funding that has spurred public and private investments in infrastructure, an increasing emphasis on technology integration and environmental compliance, private equity firms pursuing aggressive acquisition strategies, and investors seeking growth-oriented opportunities.
The first half of 2024 also saw an uptick in the number of high-value transactions, with 11 deals exceeding $100 million, up from eight during the same time frame in 2023. The growth in deal sizes contributed to total revenues acquired, climbing by 9 percent in the first six months of the year, reaching $4.4 billion.
A/E and environmental firms that serve the water and wastewater market continue to be in the greatest demand, thanks to the urgent need to modernize aging infrastructure and comply with increasingly stringent environmental regulations, coupled with a $50 billion infusion of federal funds from the Infrastructure Investment and Jobs Act. Firms working in the transportation and energy markets are also in high demand, while interest is lower for firms working in the commercial, retail, and hospitality markets, which are struggling with increased debt burdens due to interest-rate hikes and shifting consumer behavior resulting from inflation.
Many buyers in search of new geographic markets are following the lead of winter-weary snowbirds and buying properties in the Sun Belt. California, which boasts the country’s largest state economy, led all states in the first half, with 26 acquisition announcements. That was followed closely by Texas, with 25 deal announcements, and Florida, with 24 acquisition announcements. Collectively, those three states accounted for nearly one-third (30 percent) of all U.S. deals in the first half of 2024.
ACEC member firms that have been aggressive in their acquisition strategies showed no sign of retreating in the first six months of 2024. Atwell (Southfield, Michigan) outpaced all buyers in the first half of the year with six acquisitions. LJA Engineering (Houston) and IMEG (Rock Island, Illinois) followed close behind with five acquisitions each. Other member firms that made multiple acquisitions in June and July included Fuss & O’Neill (Manchester, Conn.), Bowman Consulting Group (Reston, Va.), Salas O’Brien (Irvine, Calif.), and Terracon (Olathe, Kan.).
Private equity (PE) firms remain extremely active in the marketplace. The number of private equity and private equitybacked deals have increased for seven consecutive years, rising more than sixfold from 28 in 2016 to 175 in 2023. With 101 transactions by private equity and private equity-backed firms in the first half of 2024—which included 13 platform investments and 88 add-on acquisitions—private equity’s stake in the A/E industry is poised for another year of growth.
Morrissey Goodale also tracked the exit of nine private equity firms from their industry investments in the first half of 2024, matching the total number of exits announced throughout all of 2023. This increase highlights the urgency for private equity firms to realize returns on their investments, particularly as the timeline to monetize aging assets nears. The growing inventory of aging private equity-owned assets that require monetization is expected to drive heightened activity in the coming year. As these firms seek to capitalize on favorable market conditions and avoid potential devaluation, we foresee a strong pipeline of exit transactions.
Morrissey Goodale anticipates the M&A landscape to remain very active in the second half of the year despite renewed concerns about the strength of the U.S. economy and unpredictability surrounding the presidential election. Favorable economic conditions, coupled with ongoing strategic initiatives across the sector, are expected to maintain the pace of deal-making, positioning the A/E industry for continued growth and transformation for the balance of 2024 and beyond.
Following is a list of recent transactions, with ACEC members highlighted in bold.
Civil and environmental engineering firm Fuss & O’Neill (Manchester, Conn.) (Engineering News-Record #296) acquired Bayside Engineering (Woburn, Mass.), a firm that offers traffic, transportation, survey, construction, and bridge engineering services.
Lighting design studio Illuminating Concepts (Farmington Hills, Mich.) joined industry leader and one of Morrissey Goodale’s Nine Movers and Shakers to Watch in 2024, IMEG Corp. (Rock Island, Ill.) (ENR #52).
McDonough Engineering (Houston), a civil engineering firm offering design and construction management services for commercial land and site development, municipal, transportation, industrial, and governmental projects, joined industry leader LJA Engineering (Houston) (ENR #67).
Industry leader and innovator Foth (De Pere, Wis.) (ENR #120), a science, engineering, and technology services firm, acquired coastal expert Olsen Associates (Jacksonville, Fla.), a firm with experience in coastal modeling, beach and inlet management, sediment transport, environmental permitting, and coastal resiliency.
Seneca Fire Engineering (Marietta, Ga.), a fire protection engineering firm specializing in fire engineering forensics, executed a letter of intent to join multidisciplinary engineering firm Coffman Engineers (Seattle) (ENR #157).
Fast-growing industry leader and one of Morrissey Goodale’s Nine Movers and Shakers to Watch in 2024 and the recipient of the 2024 Most Proficient and Prolific Acquirer Award, Bowman Consulting Group (Reston, Va.) (ENR #78) acquired Element Engineering (Lakewood, Colo.), a civil, water, and wastewater engineering firm.
To view the most up-to-date and “live” versions of the M&A heat maps, and to see who are the buyers and sellers in each state, go to www.morrisseygoodale.com.
Nick Belitz is a principal with Morrissey Goodale LLC, a management consulting firm that specializes in the A/E and environmental industry and provides strategic business planning, merger and acquisition, valuation, ownership transition, executive coaching, and leadership development services. He can be reached at nbelitz@morrisseygoodale.com.
Employee-owned company Weston & Sampson (Reading, Mass.) (ENR #142) acquired MBD Consulting Engineers (Southern Pines, N.C.), a civil engineering firm with a focus on water and wastewater treatment, serving the public and private sectors.
Civil, structural engineering, geospatial, safety, and environmental firm LJB (Miamisburg, Ohio) (ENR #350) acquired Grantham & Associates (Garland, Texas), a civil engineering and surveying firm with experience in water and wastewater, transportation, and trail design.
Bowman Consulting Group (Reston, Va.) (ENR #78) also acquired FCS Group (Redmond, Wash.), a financial, economic, and management services firm focused on public sector entities including utilities, state and local governments, regional agencies, and public safety organizations.
Industry leader Benesch (Chicago) (ENR #104) acquired Big Muddy Workshop (Omaha, Neb.), a landscape architecture, master planning, and green infrastructure services firm serving communities, public agencies, institutions, and nonprofit environmental groups.
Ehvert Mission Critical (Dallas), a firm specializing in the design, construction, and operation of mission-critical facilities, joined facilities planning and design firm and another of Morrissey Goodale’s Nine Movers and Shakers to Watch in 2024, Salas O’Brien (Irvine, Calif.) (ENR #39).
Employee-owned industry leader Terracon (Olathe, Kan.) (ENR #18) acquired Harbor Environmental (Little Rock, Ark.), a multidisciplinary firm that provides engineering, compliance, and sustainability services.
Civil engineering, surveying, and planning firm Interstate Engineering (Jamestown, N.D.) acquired Landteam (Alexandria, Minn.), a firm focused on environmental work, private development, construction surveys, and municipal engineering.
ENR’s #29 ranked global design firm GHD (Sydney, Australia), acquired RIM Architects (Anchorage, Alaska) and its subsidiary companies. RIM is an architecture firm serving the entertainment, hospitality, health care, and government facilities sectors.
